Uber Facing Another Overtime Lawsuit in NJ

New Jersey is set to enter the battleground on one of the biggest employment law issues developing across the country. A class action law suit has been assigned to federal court in Trenton on behalf of New Jersey Uber drivers. The suit was originally filed by former Uber driver, Jaswinder Singh, in Monmouth County Superior Court on April 22nd and was removed to U.S. District Court for the District of New Jersey on May 27th. The suit claims the car service tech company has violated the New Jersey Wage and Hour Law and the New Jersey Wage Payment Law by failing to pay overtime to drivers working more than 40 hours per week. Under these laws, a worker must be classified as an “employee” in order to be eligible for overtime pay. Uber drivers in New Jersey and other states are currently classified as “independent contractors” under their contracts, meaning Uber has no legal obligation to pay the requested overtime wages. Singh argues the 15,000 Uber drivers in New Jersey are eligible employees because they “completely relied on Uber for driving assignments” and did not have the independence to make important business decisions.

The New Jersey lawsuit is not the first of its kind and will not likely be the last. The first major case, O’Connor v. Uber Technologies, Inc., involved California and Massachusetts Uber drivers, similarly claiming they were wrongly categorized as independent contractors. That case was settled in April 2016, leading to a $100 million settlement payment and other benefits for the drivers, but it left the independent contractor issue unresolved. Along with New Jersey, Uber drivers in Arizona, Florida, Illinois, New York, Ohio, and Texas have filed similar lawsuits following the O’Connor settlement. There are several important questions that may or may not be answered in the near future as these cases unfold.

Will these cases go to trial? If so, courts may have the opportunity to finally determine the employment status of Uber drivers. A designation of employee could result in overtime wages along with other legal protections offered exclusively to employees.

If courts do categorize the drivers as employees, how will it affect the Uber experience? Much of Uber’s success lies in its business structure. Designating drivers as independent contractors reduces or eliminates many expenses for the company and it allows for greater freedom for drivers. Making drivers employees will certainly change the internal structure of Uber, but it will also be interesting to see if it affects customers in terms of rates, driver availability, and overall experience. There may also be new implications of vicarious liability for Uber in the event of auto-accidents.

Will Uber be able to continue settling these lawsuits? The large $100 million settlement has clearly attracted drivers in other states. We will soon see if Uber continues to settle these cases as a cost of doing business or if/when it will risk going to trial to decide the employee designation dispute. In December, 2015, The Wall Street Journal predicted the value of Uber could exceed $60 billion, so paying settlement claims to quiet disgruntled workers seems to be a viable option, at least for now.